Whacking the fracking operations in Mountain View County for damage to roads and other county infrastructure will not be as easy as imposing a new tax on wells, council learned at last Wednesday's meeting.Last month, Reeve Paddy Munro had urged council to start ìwhackingî hydraulic fracturing projects to the tune of $25,000 per well to pay for infrastructure repairs ñ but a report from administration presented last week ruled out any simple options.Well drilling equipment tax rates are set provincially and the county cannot charge more than the minister authorizes, Jeff Holmes, director of legislative, community and agricultural services, told council.The county could increase its linear tax rate, applied on pipelines and wells, but under the Municipal Government Act it would also have to increase the rate for other non-residential and non-agricultural properties, Holmes said.A special tax could be considered on an area-wide basis, but it too would have to apply to other, unrelated activities in the same area, he said.And a business tax, levied according to specific classes of business, could be introduced but it would have to replace linear and machinery/equipment taxes and ìthe county may not come out ahead of our current tax structure.îWhile the county can increase its inspection fees and pipeline crossing fees, ìtaxation of the oil and gas industry is primarily regulated by the Alberta government to ensure that oil and gas operators are treated equitably throughout the province,î Holmes reported.Business licensing fees could be another possible avenue but would have to be investigated, the report said ñ adding, however: ìIt may be difficult to assess a business licence fee based on the number of individual wells completed.îAfter receiving the report, Munro thanked Holmes for the information.ìBut,î he added, ìI wanna figure out how we can tax these guys. If you can't do it let us know and we'll get somebody who can.îCAO Tony Martens agreed it was a serious issue ñ but if there are no fees that can legally be charged, he said, there would be no reason to hire a consultant to confirm that finding.ìWe need to build allies in this,î Div. 4 Coun. Bruce Beattie said, noting the county's bottom line is that ì63 per cent of our revenues are related to oil and gasî taxes.ìI think we have to review our road fees and make sure they're in line (but) I don't support at this point engaging a consultant Ö We'll have a lot more success if we do it from a provincial perspective,î Beattie said.Div. 1 Coun. Kevin Good said the problem with waiting for the province to do something is the government's slow reaction time.ìEveryone knows a 15-stage frack is the equivalent of eight or nine wells (in its impact) but the province is treating it as one well. We need to do what we can until they get up to speed. The biggest problem I see is they treat something with 10 times the impact as a regular well,î Good said.Munro said oil companies do not pay the government any royalties during the first year of a project.ìWhat consultants have told me is that 60 per cent of the volume of the field is taken out the first year with zero dollars in royalty payments. So the province hasn't made money on this either,î Munro said.Council directed administration to bring the issue back to policies and priorities for further discussion and to draft a resolution on hydraulic fracturing for the Alberta Association of Municipal Districts and Counties.At a public meeting in Eagle Hill that night, Graham Gilchrist of the Farmers Advocate Office told county officials that the municipality had the power to impose rules and charges on oil and gas companies.ìYou have the power of bylaw, you have the power of taxation,î Gilchrist said, suggesting a noise bylaw and a business licence, respectively, to address nuisance and cost.ìI like the way you think,î Munro told him.In his report to council, Holmes suggests even raising inspection fees could be problematic.ìThe existing road permit system is working well with great compliance. Our fees are competitive with other municipalities,î he wrote. ìIncreases to these fees would have implications on other industries that use these services, and may discourage participation in the program.îUnder the current system, he wrote, energy companies are required to provide a letter of credit to guarantee the repair of roads damaged during exploration.ìTo date we have not had to draw on a letter of credit. Industry has been very proactive, ensuring that road damage is repaired in a timely manner,î the report said.
